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Downgrade to REDUCE We are downgrading our rating on TM to REDUCE from an Add due to: 1) a slower-than-expected reduction in capex; and 2) slowing net adds for its internet division. The former also means that there is limited catalyst for strong DPS upside while the RM2bn loan obligation due by year end, further reinforces our beliefs of TM’s inability to reward shareholders with more dividend payout. Conversely, the latter factor depicts risk of slowing earnings momentum, and occuring even prior to competition from the Astro-Maxis collaboration. The voice segment (37% of revenue), in our view, is also unlikely to see any meaningful recovery as mobile substitution persist and data for demand grows. All in, we see limited further near term re-rating catalyst for the stock.

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